Morgan Stanley Comments on JC Penney's Partnership with Martha Stewart Living

Morgan Stanley has published a research report on JC Penney JCP commenting on the company's partnership with Martha Stewart Living MSO. In the report, Morgan Stanley writes, "We remain Underweight JCP shares as we expect product weakness, lack of consumer awareness, and increased competitive pressures to continue to drive market share loss over the next 12 months. JCP's issues are deeply rooted and will take time to fix. We see signif. earnings risk in 2012 (we are forecasting 3% contraction in EPS vs. the Street's +20% growth). We believe the market will not look through at least 5 more quarters of earnings misses for a potential turn in 2013/2014. With JCP shares trading at 20x 2012 P/E vs. peer group at 13.6x, we see both EPS risk and multiple contraction as likely." Morgan Stanley maintains its Underweight rating on JC Penney, which is currently trading down $0.04 from yesterday's $33.30 closing price.